Key manufacturing statistic dropsAnother warning light lit after total supply in manufacturing dropped for the first time since the statistic was first compiled in 2010, indicating a slowdown in Korean manufacturing.
According to Statistics Korea Tuesday, last year Korean supply in manufacturing fell 0.1 percent compared to the previous year. In 2017, the statistic rose the most ever, up 3.8 percent.
The agency cited the contracting domestic market for the first ever decline in manufacturing supply. But it also cited the massive investment in equipment and machinery by the semiconductor industry in 2017 as another contributing factor.
Domestic supply shrunk 1 percent while imported parts supplied to Korean manufacturers grew 2.6 percent. As a result, imports now account for 25.7 percent of supply to local manufacturers, up 0.3 percentage points from 2017.
Machinery equipment supply fell 5.7 percent, with domestic supply falling 4.3 percent and imported supply shrinking 8.7 percent. Processed metal supply dropped 6.6 percent, with local supply falling 6.9 percent, while imports fell 3.6 percent.
The struggling construction and automotive industries contributed to the declines.
Food and beverage supply to manufacturers was up 5.2 percent, with import supply surging 16.2 percent. Domestic supply was up as well, but at a slower pace of 2.3 percent.
The consumption of ready-made food is rising fast, and makers of these products are growing quickly.
Most worrying is the rapid expansion of imported supply for electronic goods. Imports for electronic goods manufacturers now account for 53.4 percent of the total, which is not only a 1.1 percentage points higher than the previous year but also the highest since related data was first compiled.
More than half of parts supplied to electronic product manufacturers are from China. Many Korean companies burdened by rising labor costs have been relocating their plants to markets with cheaper workers, including China and Southeast Asia.
The statistics agency report was released on the same day a state think tank released a report warning of a contracting economy.
In its latest economic assessment, the Korea Development Institute (KDI) said Korea’s economy is continuing to slow, with exports shrinking amid a struggling domestic market.
It also noted that while in December consumption rose 3 percent year-on-year, the recent monthly average was over 4 percent.
December’s growth was a clear sign that people are starting to close their wallets.
BY LEE HO-JEONG [email@example.com]
with the Korea JoongAng Daily
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